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2016 (6) TMI 31 - ITAT MUMBAI

2016 (6) TMI 31 - ITAT MUMBAI - TMI - Levy of penalty u/s.271[1][c] - Held that:- Considering the decision from Hon’ble Apex Court in CIT vs Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ), wherein, on the issue whether merely because, the assessee has claimed expenditure, which was not accepted or was not acceptable to the Revenue that by itself would not attract penalty, clearly favours the claim of the assessee. Thus in the present case we direct the Ld. Assessing Officer .....

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/- u/s 271(1)(c) of the Income tax Act, 1961 (hereinafter the Act). 2. During hearing, the ld. counsel for the assessee, Shri Ronak G. Doshi, at the outset, claimed that on identical facts, for Assessment year 1999-2000 and 2001-02 vide order dated 07/01/2011, the penalty levied u/s 271(1)(c) was deleted by the Tribunal in ITA No. 4128/Mum/2008 and ITA No.3154/Mum/2007. This factual matrix was consented to be correct the ld. DR, Shri M. V. Rajguru. No contrary facts were brought to our notice by .....

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the amount of penalty has been shown at ₹ 6,20,064/- but the Ld. counsel of the assessee pointed out that this amount was actually ₹ 4,84,167/- because penalty in respect of depreciation on vehicle was deleted by the CIT(A) himself, whereas the total amount was mentioned in the ground is ₹ 6,20,064/-. In this regard he has also filed a letter that this amount should be taken at ₹ 4,84,167/- and, therefore, for adjudication of the appeal for A.Y 1999-2000 we are consideri .....

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ssessee referred to page-54 of the paper book, which is a copy of the Shareholders Agreement between the assessee company and Boots Company, PLC who was a foreign partner in the joint venture. He invited our attention to clause 9.13 through which it was agreed that Boots Company, PLC i.e. joint venture partnership was responsible for payment of salaries and other expenses in relation to the Managing Director. He submitted that, in fact, the Managing Director was to be appointed by Boots Company, .....

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ting the resignation of Mr. Khoo Seng Chee Joseph and appointment of Mr. Tarun Pasricha. Since the representative of the assessee company was appointed as the Managing Director, assessee also verbally agreed to pay the remuneration which was in excess of the limits prescribed under sections 198/349 of the Companies Act and in this regard he referred to page-21 of the paper book, which is a copy of notes to the financial statement showing the calculation of the remuneration. As the remuneration w .....

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. The Shareholders Agreement was not changed because it required lots of formalities and could have taken many months because certain approvals were also required. 6. On the other hand, Ld.DR strongly supported the order of the CIT(A) and pointed out that it was clearly found by the AO that as per Shareholders Agreement the other partner of the joint venture i.e. M/s. Boots Company, PLC was required to pay the remuneration and, therefore, there was no justification for claiming this expenditure .....

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nt and, in fact, the appointment was made accordingly. However, the representative of M/s. Boots Company, PLC, Mr. Khoo Seng Chee Joseph resigned and later on the representative of the assessee company Mr. Tarun Pasricha was appointed as the Managing Director. His appointment as well as the fact of resignation of Mr. Khoo Seng Chee Joseph has been duly reported in the Directors Report. The fact of appointment of Mr. Tarun Pasricha has not been doubted. Further, we find that remuneration paid to .....

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ary was definitely paid to Mr. Tarun Pasricha which was duly approved by the government and even his services have not been doubted. Merely, because a foreigner who was earlier the managing director resigned and then a nominee of the Indian company was appointed, then it is not necessary for the joint venture partner to amend the Shareholders Agreement which involves lots of time and expenditure which may not have been feasible because of the smallness of the item of the expenditure. We further .....

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